Germany’s top financial watchdog threatened to fine Deutsche Bank if it doesn’t implement controls against money laundering by a set deadline, suggesting the regulator isn’t satisfied with the bank’s efforts to police dirty-money flows.
BaFin, as the regulator is known, said late 4 November that on 28 September it told Deutsche Bank to take specific measures to prevent money laundering and terrorism financing so it could fulfill requests BaFin had made in 2018 and 2019. The regulator said it would impose financial penalties if the bank doesn’t comply.
Last year, the regulator expanded the role of a monitor it appointed in 2018 to look over implementation, showing it was still unhappy with the progress.
Deutsche Bank needs to meet deadlines by mid-2023.
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A spokesman for the bank said there were no new findings in the latest order. “We are fully aligned with the BaFin on the necessary measures and have already completed a large proportion of them,” he added.
BaFin’s latest warning adds pressure on chief executive officer Christian Sewing, who since taking over the bank in 2018 has tried to steer it away from scandals and focus on its operations. Last week it reported a jump in third-quarter profit as rising interest rates improved its lending business.
Costs, however, remain under strain, partly because of how much the bank is spending to boost internal controls.
Past trouble with regulators includes paying fines in the US for failing to properly monitor dealings with late financier and convicted sex offender Jeffrey Epstein, and for its role as a correspondent bank for the Estonian branch of Danske Bank, where some $230bn had flowed from Russia and other former Soviet states over years with little oversight.
Deutsche Bank also has monitors in place as part of a 2017 settlement with New York state authorities related to “mirror trades,” in which the bank moved $10bn of Russian client money out of the country.
Following Russia’s invasion of Ukraine, Deutsche Bank said it would withdraw from the country.
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